When Shipping Overcapacity Meets Falling Demand

The following charts show what happens when an increasing number of ships meets falling demand. 

Harper Petersen Shipping Rates by Vessel Size – Ten Years
 

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Source: 

More charts below, but first let’s explain TEU.

TEU stands for twenty-foot-equivalent unit. It’s an imprecise term because lengths have a 20-foot long (6.1 meters) standard but heights vary.Heights range from 2 feet three inches to 9 foot six inches. The most common heights are 8 feet 6 inches (2.6 m) and 9 feet 6 inches (2.9 m). 

image: http://2.bp.blogspot.com/-W6nEWjr-3Ns/VmdPRGVIUxI/AAAAAAAAggQ/hrxPJZTVbRQ/s400/TEU.png

Let’s hone in on shipping rates for the last two years.

Harper Petersen Shipping Rates by Vessel Size – Two Years

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Harper Petersen Index – Ten Years

image: http://3.bp.blogspot.com/-MRkVjEFEkqw/VmdLKOyHlNI/AAAAAAAAgf8/FLsd9A8Qqao/s400/Harper%2BPetersen%2B2015-12-08C.png

Harper Petersen Index – One Year

image: http://2.bp.blogspot.com/-PdIT1Kw9EQ0/VmdLfxA3_aI/AAAAAAAAggE/z-1awL-VgkU/s400/Harper%2BPetersen%2B2015-12-08D.png

Something clearly happened in first quarter of this year in terms of shipping demand.